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March 9 — The Paris Agreement has become a powerful pivot point in efforts to transform the global economy into a more sustainable model, participants said at the Climate Leadership Conference in Seattle.

Since the international deal was reached in Paris in late 2015, markets have already begun to shift in response as businesses and bond raters increasingly include climate change in their business forecasts, participants said during a March 8 panel discussion at the conference.

“The fact is that the world is now saying this is the direction we are going in; the markets are listening. And frankly, the markets weren’t just listening because of Paris;
the markets were already pivoting before Paris,” Natural Resources Defense Council President Rhea Suh said.

She called the market signals sent to business from Paris “critically important” and added that transformation will continue to occur from those signals.

Businesses Respond to Signals

The BMW Group's Glenn Schmidt, vice president of government and external affairs for the Americas, said the company is increasingly looking at electric vehicles as the world seeks to curb its greenhouse gas emissions. The company also is giving greater scrutiny to the life cycle greenhouse gas impact of products and services, he said.

“Sustainability credentials are really becoming an arena of competition as well,” Schmidt said. Companies, he said, are positioning themselves to try to reinvent their business models and create a “sustainability value proposition”
for their customers.

The Paris Agreement also should spur a renewed push for global carbon policies that recognize the international nature of modern markets, Kevin McKnight, vice president of environment, health and safety and chief sustainability officer for the aluminum company, Alcoa, said. That could include a cap on U.S. emissions, he said.

“We operate today in many jurisdictions around the world that have already set carbon policies,” McKnight said. “And that patchwork of policies that we have to operate in today is not better than a global policy. A global policy would be much easier to predict, much easier to manage, much easier to manage from a competitive environment quite honestly.”

States See a Role

California Secretary of Environmental Protection Matthew Rodriquez said the Paris Agreement promoted the perspective that programs by states and other sub-national entities can reduce greenhouse gas emissions “without harming your economy.”

He said California has been a driving force in forging agreements among states and sub-national regions around the world. And he touted the Under 2 MOU—a memorandum of understanding which commits sub-national entities to reducing greenhouse gases—saying the U.N. secretary general has called it “a game changer” .

Rodriquez said Paris provided a forum for state and local governments to show they can serve as a model for nations.

“There is a great deal of momentum behind regional and state actions,” he said. “I think it’s fair to say that we helped developed that feeling of momentum that you found in Paris, and we don’t want to let that go.”

He said Paris gave impetus to the Under 2 MOU concept, and there were discussions in London last week on how to expand it.

‘Now It’s About Implementing.'

While states and industries have begun to account more for climate change in light of the Paris Agreement, panelists said implementation will be key.

“I think there is palpable momentum from Paris,” McKnight said. “And I do believe that there is some hope that that momentum can somehow carry us closer towards this ideal of a global market mechanism that may somehow cause us to all address carbon in a way that recognizes all of the issues that companies like mine, trade-exposed companies, can get their arms around. So yeah, I think it moves us a little closer. But I am also a realistic, and I recognize it’s probably going to take some time.”

BMW's Schmidt drew a comparison to the role of natural gas as a bridge to renewables in the energy sector.

“You need to be thinking at an industry level about what is your bridge technology and how you are going to be transforming,” he said. “Now that we have our target and we know our global carbon budget and we have our framework; now it’s really about implementing.”

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